CIL to invest Rs 6k cr on foreign acquisitions this fiscal

NEW DELHI: State-owned Coal India Ltd (CIL) has built a war chest of Rs 6,000 crore for foreign acquisitions this fiscal and is currently evaluating five mining assets in countries such as the US, Australia and Indonesia.

"In addition to our capex plan of Rs 3,800 crore for 2010-11, we have earmarked Rs 6,000 crore for foreign acquisitions this fiscal. Right now we are evaluating 5 proposals from companies in the US, Australia and Indonesia," CIL Chairman P S Bhattacharyya told reporters here.

The Chairman said US-based Peabody Energy Corp is one of the global firms that has offered to work in partnership with the navratna firm and CIL is considering either to buy equity stake or form a joint venture.

"We are working to close some of the deals in the next 4-5 months," he said, adding altogether 10 proposals from five companies were taken for due diligence out of the 30 proposals received from eight large companies in response to its global expression of interest (EoI) floated in July 2009 for selecting strategic partners for overseas acquisitions.

He said, "Due diligence with association of merchant/ investment bankers as well as technical consultants is in the pipeline only for listed companies."

He said the PSU may invest about USD 2 billion (about Rs 9,000 crore) over the next four years on foreign acquisitions and expects 50 million tonnes per annum (MTPA) coal from such ventures to meet the domestic demand.

In the current fiscal, CIL expects coal imports to increase to 100 MT from 80 MT in 2009-10.

The navratna company, which accounts for nearly 80 per cent of the domestic coal production is planning to launch its initial public offer (IPO) in July and list its shares in August.

The IPO, part of the government's plan to raise funds proposes to sell 10 per cent government stake in Coal India to raise about Rs 12,000 crore.

"We aim to launch the IPO by the end of July and close the process by August 12," Bhattacharyya said.

Bhattacharyya said that even as the entire proceeds will go to the government "the company will gain in terms of better governance as 50 per cent of the board will comprise independent directors (under listing guidelines) increasing public accountability."

He said the company expects a "good response" to the stake sale as the miner has about 63 billion tonnes of coal reserves and demand for the fuel is unconstrained.